Will take up stimulus package for auto industry with PM: Praful Patel

PTI|

Updated: Jul 18, 2013, 04.49 PM IST

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"Ultimately, it is one of the largest employers and it contributes almost 25 per cent of manufacturing GDP."

NEW DELHI: Concerned over the prolonged slump in auto sales, Heavy Industries and Public Enterprises Minister Praful Patel today said the need for an industry stimulus package will be taken up with the Prime Minister.

"We are concerned about the auto sales (decline). I am going to take up the issues with Prime Minister Manmohan Singh and Finance Minister P Chidambaram...we need to give some kind of booster dose to the auto industry," Patel told reporters here at a function organised by Assocham.

Stressing on the need to support the auto sector in tough times, he said: "Ultimately, it is one of the largest employers and it contributes almost 25 per cent of manufacturing GDP."

The country's car sales fell for a record eighth month in a row in June, declining 9 per cent, as the economic slowdown and low consumer sentiment continued to hit demand. Sales of vehicles across all categories dropped 5.1 per cent to 14,07,767 units in June from 14,83,443 units a year earlier.

The sales drop prompted the Society of Indian Automobile Manufacturers (SIAM) to seek a stimulus package for the automobile sector from the government.

SIAM is looking at a package similar to one given during the 2008-09 downturn, in which excise duty on two-wheelers, small cars and commercial vehicles was reduced to 8 per cent.

Expressing concern over the impact of declining sales on employment, Patel said: "I feel a lot of auto companies are under stress and they are laying off some people. This is not something we should allow to continue for long and there is a need to arrest the decline and take some measures."

Earlier this month, Maruti Suzuki India asked 200 contract workers to go on indefinite leave while cutting down diesel engine production. Mahindra & Mahindra said it will halt production for up to eight days across its plants in July to adjust output to market demand.

Talking about attracting foreign direct investment (FDI), Patel said, "We are not getting the FDI as required and in fact that is the reason government has taken further steps to relax some restrictions and allow further FDI in key sectors. It is a step in the right direction."